Discussion on How much to pay for allstate BOB ? within the General Insurance Agent Discussions, part of the Insurance Agents and Brokers Forum category.
What percentage of yearly premiums should I pay to buy Allstate BOB from established agent who is retiring?
Thanks,...
What percentage of yearly premiums should I pay to buy Allstate BOB from established agent who is retiring?
Thanks,
This is a question you need to ask your CPA, not a bunch of agents. You need unlimited audit access to the books and a paid opinion. There is no other way to know what the business is worth. Go back five years minimum.
What's the point of taking over a book of business to break even? There isn't one. You may as well start on your own from scratch.
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Allstate will buy back at 1.5 from the info I have gotten this past week.
One Agent that already had a buyer said a few years ago they were getting 3.0.
Now it depends, but it is looking like 2-2.5
One of the tricks with buying a book of business is to make sure there is a retention clause, and policies that have been on the books for a while are worth more than policies written in the last 6 months.
You also have to know what the likelihood of customers leaving is. In some areas, Allstate is imposing pretty significant rate increases on homeowners, which will cause a percentage of the book to shrink. In some areas, they are limited on what they can write, which limits growth opportunities.
1.5 to 2.5 times the annual commission is pretty norm, but there are things that can make it worth more or less.
Lots of variables to think about. One thing you want to make sure of though, if you buy a book of business, that it comes with the phone number that the agent has had for the last xxx years that clients call on. If possible, you want the agents cell phone number as well, don't try to retrain clients to call a new number.
One of the tricks with buying a book of business is to make sure there is a retention clause, and policies that have been on the books for a while are worth more than policies written in the last 6 months.
Good call on the retention clause. Also, include a noncompete clause. You don't want the guy you purchase from to get appointed w/another carrier and steal all his clients back from you.
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Silence is golden - Duct Tape is Silver
One of the tricks with buying a book of business is to make sure there is a retention clause, and policies that have been on the books for a while are worth more than policies written in the last 6 months.
You also have to know what the likelihood of customers leaving is. In some areas, Allstate is imposing pretty significant rate increases on homeowners, which will cause a percentage of the book to shrink. In some areas, they are limited on what they can write, which limits growth opportunities.
1.5 to 2.5 times the annual commission is pretty norm, but there are things that can make it worth more or less.
Lots of variables to think about. One thing you want to make sure of though, if you buy a book of business, that it comes with the phone number that the agent has had for the last xxx years that clients call on. If possible, you want the agents cell phone number as well, don't try to retrain clients to call a new number. Dan
Good advice all the way around. I would not have thought about the cell phone number! Good advice.
If the books was such a money maker why are they selling it? Look for people selling it for the right reasons. Health problems , family emergencies, etc., etc.,
Judging by the amount of books for sale and the TOP dollar they are asking something is likely wrong on the corporate side.
I wouldn't buy just because I can not see my self jumping through hoops and "complying" with their business model.
No, I'm not. There is no guaranteed revenue stream that comes with that book. Let's say it's just making enough money to cover expenses. If you pay $500,000 at 2x multiple you've just put your rear on the line for something that may not succeed. Plus, you're going to battle attrition because any agent loyalty will be lost (this is a HUGE factor for a significant percentage of P&C customers, if you don't agree you haven't sold it before) and be wrapped in legacy customer service issues.
Since you seem so sure about it, why would you rather buy a book and break even (not including personal salary) and be weighted with all those issues that start on your own?
If you're doing better than breaking even, yes it would be easier. But, that wasn't the premise of my comment.
How much to pay for allstate BOB ?
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